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Wednesday, April 17, 2024

G20 “crisis meeting” in Saudi Arabia as world economy burns

As the world grapples with the economic devastation wrought by the pandemic, the G20 leaders meet virtually to discuss stimuli for the battered economy. It seems that no one has the answers needed to combat the pandemic.

G20 finance ministers and central bankers are set to hold talks Saturday aimed at spurring global economic recovery from a coronavirus-triggered recession amid growing calls to widen debt relief for crisis-hit poor countries. Saudi Arabia hosts this G20 meeting at a time when the world finds itself torn apart by the pandemic.

The virtual talks, hosted by Saudi Arabia, come as the surging pandemic continues to batter the global economy and campaigners warn of a looming debt crisis across poverty-wracked developing nations.

Saudi Arabia hosts G20 meeting to ‘discuss economic outlook’

The ministers and bankers will “discuss (the) global economic outlook and coordinate collective action for a robust and sustained global economic recovery,” G20 organisers in Riyadh said in a statement.

The talks, chaired by Saudi Finance Minister Mohammed al-Jadaan and central bank governor Ahmed al-Kholifey, come a day after the European Union held its first face-to-face summit in five months to discuss a post-virus economic rescue plan.

Kristalina Georgieva, the International Monetary Fund’s managing director, has warned that despite some signs of recovery, the global economy faces sustained headwinds, including the possibility of a second wave of COVID-19.

Read more: G20 vows to help global tourism sector

“We are not out of the woods yet,” Georgieva said in a message to G20 finance ministers, warning the pandemic was likely to increase poverty and inequality.

Downgrading its growth forecasts, the Washington-based crisis lender last month said it expected global GDP to fall by 4.9 percent this year due to a deeper contraction during lockdowns than previously anticipated.

The $11 trillion in stimulus offered by G20 nations has helped to prevent a worse outcome, but “these safety nets must be maintained as needed and, in some cases, expanded,” Georgieva said.

Is there a catastrophe on the horizon?

In April, G20 nations announced a one-year debt standstill for the world’s poorest nations.

Campaigners have criticised the measure as grossly inadequate to stave off the knock-on effects of the pandemic.

Read more: G20 leaders’ ‘united’ response to coronavirus crisis: pledge $5tr to fight the disease

France said on Friday it would ask the G20 to extend the debt service suspension.

“The economic crisis will persist in 2021 throughout the world,” French Finance Minister Bruno Le Maire said in a statement.

“France calls on the G20 countries to extend the moratorium on debt servicing to give the poorest countries the means to overcome” the crisis.

Poor countries apply for G20 relief

So far, 41 out of the world’s 73 poorest nations have applied for the G20’s debt service suspension initiative, saving them up to $9 billion this year, according to charities Oxfam, Christian Aid and Global Justice Now.

But the 73 countries are still required to pay up to $33.7 billion in debt repayments through the end of the year, the charities said in a research report released on Thursday.

Read more: Saudi G20 is meeting to discuss coronavirus

“The global economy has been hit harder by the coronavirus than the already dire predictions we saw in April ―- the G20 finance ministers have the mandate to avert an impending catastrophe for hundreds of millions of people,” said Chema Vera, Oxfam’s interim executive director.

“They must make (the initiative) legally binding to cancel all debt payments, including private and multilateral, through the end of 2022 and also include middle-income countries,” he added.

“An eight-month freeze on bilateral debt alone does not come close to freeing up enough cash or time for the world’s poorest countries to cope with the pandemic and its effects.”

Saudi Arabia G20 meeting as COVID exposes glaring global inequalities 

Amnesty International also called on G20 nations to “cancel the debt owed by the poorest countries for at least the next two years”.

“COVID-19 has exposed the glaring inequalities that exist in our world,” said Julie Verhaar, Amnesty’s acting secretary-general.

“If we are to build resilience to future crises, we need to make long-term structural changes that will require courage and leadership from G20 countries.”

Read more: Trump goes to lengths to protect Crown Prince Salman; Praises him in G20

Argentina’s Foreign Minister Felipe Sola said he would urge the G20 to set up a global “solidarity-based fund” to address the increase in poverty in virus-battered countries.

“We want decisions on debt, not only for the poorest countries but also for middle-income countries that are impoverished” due to the pandemic, he told reporters in Buenos Aires.

But it was unclear how receptive the group will be to such demands.

The world’s 20 most industrialised nations are themselves scrambling to defend their virus-wracked economies amid forecasts of a deepening recession.

Last month, the Organisation for Economic Co-operation and Development (OECD) said measures to curtail the disease caused a record 3.4 percent drop in GDP for G20 economies in the first three months of 2020.

That marks the biggest decline since the Paris-based agency began compiling data in 1998.

AFP with additional input by GVS News Desk